Chennai: Three out of five dissenting directors of Kasturi and Sons Ltd, publisher of The Hindu newspaper, on Tuesday filed a case with the Chennai bench of the Company Law Board (CLB) against an impending resolution to oust three of them from their editorial posts, according to a person directly involved in the matter.

On 16 April, The Hindu’s editor-in-chief N. Ram and six other board members proposed the appointment of Siddharth Varadarajan, the 132-year-old daily’s national bureau chief, as editor—the first time that someone from outside the founding family would occupy the post.

At the same meeting, the seven board members also sought the resignation of directors holding editorial posts.

The move was likely aligned with consulting firm McKinsey and Co.’s suggestions for professional management, as advised by them in a 2010 study of the business.

The individuals and families represented by the five dissenting directors own 40% of the shares in the company and insist that the “ordinary resolution" related to editorial changes, scheduled to be finalized through a vote at a 20 May extraordinary general meeting (EGM), should be turned into a “special resolution".

An ordinary resolution can be passed with a simple majority but a special resolution needs a nod from at least 75% of the stakeholders, according to the Companies Act of 1956.

The dissenting board members are hoping the CLB will hear the case ahead of the 20 May EGM, the person cited above said. The case seeks to challenge the 16 April actions of the board involving the removal of directors from editorial positions and the appointment of Varadarajan, according to the person who describe the act was “vindictive and oppressive".

The CLB is a quasi-judicial body that can offer remedies or impose penalties on firms.

“It is a competitive environment and while such legal issues may not affect day-to-day operations, it could lead to a lack of focus for the management and affect long-term strategy for the company," says Jehil Thakkar, executive director of KPMG India’s media and entertainment practice.

Ram couldn’t be reached over the telephone and didn’t respond to an email query.

The publishing house has seen four significant family fights in the past two decades.

Last year, K. Balaji, another board member, was named managing director to take over from Murali. The CLB then ruled in Murali’s favour, reinstating him. Judge Lizamma Augustine, who heard last year’s case, will be deciding the one filed this week as well. The group’s papers compete with the Hindustan Times and Mint, both published by HT Media Ltd, in some areas. Kasturi and Sons logged profits after tax of ₹ 31 crore on revenue of ₹ 935 crore in 2011, according to documents obtained by Mint.